Friday, February 12, 2010

Hazel Towers Tenants Ask PSC Again for Stay and Outside Audit of Submetering After New Overcharges

The saga of ineffective PSC regulation of submetered electric service provided to tenants at Hazel Towers is in its second year. The PSC did not on individual tenant complaints of overcharges, rampant violation of HEFPA, and noncompliance with the PSC's prior Order allowing submetering at Hazel Towers. After individual complaints were brushed aside, the Hazel Towers Tenants Association (HTTA) filed a complaint in 2008 with the PSC seeking investigation and a stay of submetering. When nothing happened in response to that complaint, handled by the PSC's Office of Consumer Services (OCS), HTTA filed a Petition with the PSC in 2009. See
The OCS Initial Determination Based on the Owner's Self-Reported Overcharges
On August 21, 2009, the PSC Office of Consumer Services (OCS) issued its Initial Determination on the 2008 HTTA complaint. The Initial Determination revealed that OCS simply asked the owner of Hazel Towers to examine its charges in selected months to see if they exceeded charges for the same amount of usage by a customer served directly by Con Edison. The owner reported that its charges indeed had exceeded the upper limit in the selected months by more than $20,000. In the Initial Determination, OCS dutifully directed that the self-reported overcharges be refunded to tenants.

At the time, we expressed deep skepticism about the rigor of the lengthy OCS "investigation" of the complaint that relied on one-sided ex parte submissions from the owner.
In its more than one year of investigation, the OCS did not conduct its own audit of books and records to determine if the owner properly calculated charges. Instead, the OCS initial determination relies on the owner's self-reported admissions of overcharges in excess of the Con Edison rate, in selected months, through 12/03/2008. This may seriously understate the magnitude of overcharges. For example,
  • Did the landlord mark up the cost of service but stay below the rate cap in some months?
  • Has the landlord selectively omitted some months of overcharges in excess of the rate cap?
Indeed, OCS acknowledged in another case that one of the Hazel Towers tenants was overcharged by $325.42 -- yet the partial data from the landlord OCS now relies on in the Tenant Association case shows only $95 in overcharges to that same tenant over the same period, indicating a very substantial "misunderestimation" of overcharges. If that case is typical, the actual overcharges could be more than three times the amount that has been acknowledged to date.
* * * *
Thus far, the clear lesson of this case seems to be that landlords may disregard with impunity all provisions of a PSC submetering order which relate to tenant-customer protections. If and when tenants complain, submeterers can address violations at their leisure in ex parte communications with OCS.
Hazel Towers Tenants to Receive $20,000 Credits of Landlord's Overcharges for Submetered Electric Service, PULP Network, August 26, 2009.

The HTTA requested an Informal Hearing at OCS to review the matter. See Hazel Towers Tenants Association Seeks Review of PSC Submetering Decision, PULP Network, October 30, 2009. In their October 27, 2009 Statement for the informal hearing, the HTTA makes the following claims:
  • The ID erroneously approved a defective, proposed lease rider to govern the rates, terms and conditions of submetered electric service;
  • Complaint procedures changed without notice and still violate HEFPA;
  • The ID was tainted by ex parte contacts with the submeterer and its counsel who made submissions upon which the ID was based without notifying PULP, as counsel to HTTA;
  • The ID erroneously permits submetered customers to be billed for electric service without the prerequisite compliance with the Public Service Commission's Submetering Order;
  • The ID erred in approving unaudited charges and only making "spot checks" for rate cap violations where there was evidence of widespread overcharges;
  • The ID erred in approving a defective, proposed Notification of Rights and Procedures;
  • The owner charged a late payment fee of $25 instead of the 1.5% per month provided by Con Edison's tariff;
  • The owner's proposed termination procedures are not in compliance with the Home Energy Fair Practices Act;
  • The owner failed to provide the low income electric rate to eligible tenants and failed to notify them of the availability of a low-income rate;
  • Tenants with arrears were not offered a written deferred payment agreement, were not offered budget billing, and were not offered quarterly billing for elderly customers;
  • The owner did not reduce the tenants' regulated rent as stipulated by the Commission Order and by the New York State Division of Housing and Community Renewal (DHCR);
  • Lack of transparency and rate disclosure that would allow comparison between submetered charges and what Con Edison would charge;
  • Failure to audit all charges where there was evidence of widespread overcharges;
  • Failure to phase in submetering with tenant consent when leases are renewed, and not all at once.
New Claims of More Overcharges
Recently, the HTTA complained of further overcharges on their electric bills.

The HTTA notified the OCS on January 14, 2010 and demanded further investigation. Also, on February 2, 2010 HTTA filed a Supplement to their Petition to the PSC, again asking the PSC to stop the submetering, and to require an independent outside audit of the owner's method of bill calculation and overcharges. Since then,
  • The owner has not responded to or refuted HTTA's submission of new evidence of overcharges
  • OCS has not responded to HTTA regarding the new evidence of overcharges
  • The owner has not responded to the Supplemental filing with the PSC, and
  • The PSC has not asked the owner to respond to the supplemental filing.
As the HTTA supplemental filing with the PSC observes, apparently the only thing the owner has done right is to change its law firm and retain Harris Beach, the law firm of a former PSC Chairman, for its superior knowledge of the PSC's "inner workings."
In 2013, the PSC issued its final decision regarding the submetering complaints of the Hazel Towers Tenants Association. See:

PSC Warns Landlords to Follow Submetering Orders Allowing Sale of Electric Service to Residential Tenants


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